Japan, U.S. Coordinate to Support Yen as Currency Slumps to Near 40-Year Low

 

Japan is expected to confirm on Monday that it coordinated with the United States to support the Japanese yen after the currency weakened to levels not seen in nearly 40 years, marking the first reported joint currency intervention by the two countries in 15 years.

According to Reuters, Japanese Finance Minister Satsuki Katayama is expected to announce that Tokyo and Washington worked together in the foreign exchange market last week to slow the yen's rapid decline. One Japanese government official told Reuters the intervention was "still ongoing."

The coordinated effort comes after the yen plunged close to 164 per U.S. dollar, its weakest level since 1986, before recovering to around 157.60 per dollar by the end of last week following suspected market intervention.

Data from the Bank of Japan suggests authorities may have spent as much as $58.97 billion purchasing yen during trading in New York on Thursday. Markets also suspect additional intervention took place on Friday.

The weakening yen has become a growing concern for Japan as it raises the cost of imported goods, fuels inflation, and increases pressure on households already facing higher living expenses.

Reuters also reported that the U.S. Treasury informed several banks it could intervene in the currency market. Treasury Secretary Scott Bessent has previously described the yen as "very undervalued," and a Reuters photograph captured handwritten notes indicating plans to purchase between $5 billion and $10 billion worth of Japanese yen.

In addition to the reported market intervention, the Bank of Japan signaled on Friday that it may move toward another interest rate increase in the near future, although it left its benchmark interest rate unchanged at its latest policy meeting.

Regional authorities also took steps to stabilize their currencies, with South Korea reportedly intervening in the foreign exchange market to support the won.

Japan has previously intervened in the currency market this year, including operations in April and May, while the Bank of Japan's June interest rate increase to 1%, the country's highest level in 31 years, provided only limited support for the yen.

The latest coordinated action underscores growing concern among policymakers over excessive currency volatility and reflects broader efforts by Japan and the United States to stabilize financial markets amid shifting global monetary policy expectations.